Property Investment Report

Transcription

1 Property Investment Report PIR 1111 Unit Pappas Way Carrara QLD Positive Real Estate Pty Ltd Suite 3, Level 2, 11 Albany St St Leonards NSW 2065 P: F:

2 Table of Contents Table of Contents... 2 Disclaimer... 3 Property Snapshot... 4 Liquidity Meter... 5 Property Overview... 6 Refinancing... 6 Some other features of the property include:... 7 Tenancy Details... 8 Property Photos... 8 Photos of already renovated unit Sales Appraisal $270, Sales Appraisal Renovated Unit Next Door Location and Surroundings Transport The Gold Coast Suns AFL Team Attractions Southport Broadwater Parklands Broadwaterway Location Map Google Earth Map Area Map Google Street View Property Financial Details Analysis Report 90% LVR & 10% equity deposit Data Report Comparable Sales Comparable Listings Appendix II Capital Growth Rates Appendix II Demographic Details Appendix VII Risks Appendix VIII Glossary of Terms CONFIDENTIAL PAGE 2

3 Disclaimer Positive Real Estate Pty Ltd does not provide advice on investments. All interested parties must rely on their own research before making any investment decision and should seek advice from a qualified Financial Planner or similar professional. The information contained within this document has been compiled from various sources to assist you in conducting your due-diligence. Please ensure you validate all information contained within this document. All sources for information contained within this Property Summary will be disclosed at your request. Positive Real Estate Pty Ltd will not accept responsibility for inaccurate information provided from external sources or third parties. As part of your due-diligence, it is the Purchaser s responsibility to seek a legal opinion of the contract and any additional terms or clauses. You must adhere to the terms, conditions and subject clauses contained within the contract of sale. We note that Positive Real Estate Pty Ltd has made a number of assumptions when preparing this analysis these assumptions have a material impact on the financials and therefore should be assessed carefully by investors. CONFIDENTIAL PAGE 3

4 Property Snapshot Investment Brief Demographics Carrara has a population of 10,000 people and an average age group of years. Households are predominately couples with children. Suburb Yield 5.3% Investment Type Equity Return Possibility Add Value /Cosmetic Renovation Equity/Capital Migration Complete Population Statistics 515,000. Expected to continue to grow by 13,000 to 16,000 people per year Investment $230,000+ Zoning Residential Property Age Built 1984 Finder s Fee Rates Weekly Rent $5,995+ GST Approx $1,116 p.a $290pw Furnished Lending Category Liquidity Of Market No 90 % + LMI Not liquid Vacancy Estimate Low Gross Yield 6.7% Net Yield 4.5% Peak of last cycle 2004 Implied Tax Rate 30% Investment Deposit and Renovation Improvements - Refinance: $45,000 approx $27,500 approx equity available for redraw on end value Yr1 Pre Tax Cash Flow p.a. Yr1 After Tax Cash Flow p.a. -$8,381 -$3,849 Owners Established Benchmark We have found a mirror image property renovated in the same block with an Appraised Value of $270,000. Note: Completed on 100% finance. For more financial information see property financial details. Buyers please be aware that all information has been collected by third parties and buyers need to conduct their own further due diligence on all aspects suggested within this report. CONFIDENTIAL PAGE 4

5 Liquidity Meter CONFIDENTIAL PAGE 5

6 Property Overview Positive Real Estate has acquired a great investment property located in Gold Coast, Queensland. The Gold Coast is the sixth largest city in Australia and one of the fastest growing regions in our country. Covering an area of 1,400 square kilometres, the city's boundaries extend from just south of Beenleigh to Coolangatta, taking in South Stradbroke Island and part of Moreton Bay and extending west to the hinterland of Mount Tamborine and the Lamington and Darlington Ranges. The property is located in Carrara, 10km west of the Gold Coast CBD. The town house is a 10minuet walk to Nerang train station so commuting to the Brisbane CBD is easily accessible. The property is a 2 bedroom town houses, within a boutique block of 10 town houses that backs onto acres of reserve and sports fields. The unit is un-renovated and could benefit from a cosmetic face lift. Some things that could be done to increase value include refurbish of kitchen and bathroom, new paint and landscaping the outdoor area. We would recommend spending 15,000 on these improvements. Refinancing Once the property is cosmetic improved you will be able to increase the LVR to 90% + LMI Total costs is $275,000, approx $27,500 approx equity available for redraw once cosmetic renovation is complete (Based on 90%LVR of Gross Realisation of $275,000) CONFIDENTIAL PAGE 6

7 Some other features of the property include: 21% growth in 36 months $4 Billion Dollar tourism sector Long term growth trend for Carrara Units 8.1% 12 Months body corporate fees paid in advance 2 car spaces & air-conditioning 45 minuet drive to Brisbane CBD Gold Coast Suns AFL team boosting tourism spending, adding $33 Million Central location with easy access to the Motorway CONFIDENTIAL PAGE 7

8 Tenancy Details Unit 2 is currently on periodical lease for $290 per week. The unit can achieve $300 per week. Property Photos CONFIDENTIAL PAGE 8

9 CONFIDENTIAL PAGE 9

10 CONFIDENTIAL PAGE 10

11 Photos of already renovated unit Sales Appraisal $270,000 CONFIDENTIAL PAGE 11

12 CONFIDENTIAL PAGE 12

13 Sales Appraisal Renovated Unit Next Door CONFIDENTIAL PAGE 13

14 Location and Surroundings 2 min drive to Bunning s warehouse 2 min drive to the industrial area 5 min drive to Coles, Woolworths and Aldi 5 min drive to Carrara stadium, home of the Gold Coast Titans and Gold Coast Suns 30 min drive to Coolangatta Airport Transport 10 min walk to Nerang Station 2 min drive to the access ramp for the Pacific highway 45 min drive to Brisbane The Broad Waterway is a foreshore way that encourages pedestrians and cyclists to travel along the Broadwater foreshores of Southport A ferry terminal is planned for a new pier to be constructed along the Southport Mall alignment The Gold Coast Rapid Transit project is looking at two possible routes through the Southport CBD. CONFIDENTIAL PAGE 14

15 The Gold Coast Suns AFL Team CONFIDENTIAL PAGE 15

16 Attractions CONFIDENTIAL PAGE 16

17 Southport Broadwater Parklands- There is a major park located along the shore of the Southport Broadwater. The state government has allocated Aus$16M with matched funding from Gold Coast City Council (over $32 million in total), to invest into the parklands. The works will include building a pier along the Southport Mall alignment. The park will be known as Broadwater Park. Broadwaterway- The Broadwaterway is a 19 km foreshoreway along the foreshores of the Gold Coast Broadwater. The Broadwaterway includes: The Spit arm The Marine Stadium, western Spit foreshores (including Sea World, Fishing fleet, Versace Hotel, Marina Mirage, Fishermans Wharf, Water Police, Sea Scouts and the Southport Yacht Club) Pelican Beach at Main Beach Southport Broadwater Parklands Marine Parade and Harley Park Labrador Broadwater Esplanades of Biggera Waters, Runaway Bay and Hollywell. Paradise Point Broadwater Parklands CONFIDENTIAL PAGE 17

18 Location Map CONFIDENTIAL PAGE 18

19 Google Earth Map CONFIDENTIAL PAGE 19

20 Area Map CONFIDENTIAL PAGE 20

21 Google Street View CONFIDENTIAL PAGE 21

22 Property Financial Details Analysis Report 90% LVR & 10% equity deposit CONFIDENTIAL PAGE 22

23 Data Report CONFIDENTIAL PAGE 23

24 Comparable Sales Comparable Listings CONFIDENTIAL PAGE 24

25 Appendix II Capital Growth Rates CONFIDENTIAL PAGE 25

26 Appendix II Demographic Details CONFIDENTIAL PAGE 26

27 Appendix VII Risks All investments involve risk. While drivers of growth and other attributes that have a positive effect on an investment have been analysed in depth, it is equally important to be aware of and understand the risks that could have an adverse impact on the investment s performance. Following are some of the risks that investors should consider prior to investing in property: 1. Market Value Risk This risk relates to the risk of the investment failing to achieve the expected growth. Much of the information we have used in our analysis is predictive and the rate of return may be affected by known and unknown risks and uncertainties. This in turn could result in the re-sale value of the investment not achieving what is expected if the vendor chooses to sell during or following depressed market activity. 2. Construction Risk This is applied to properties purchased off the plan. Throughout such projects the developer may arrange finance facilities related to the land acquisition, development and construction of the project. This may result in issues arising in the delivery of the product on time and as specified on the contracted terms. Delays in the delivery period would result in opportunity costs as investors funds may not be able to be redirected to alternative investments. 3. Rental Yields Rental yields fluctuate and are affected by other market factors. They may go up or down depending on factors such as supply, demand, employment, investment in the area and the state of the overall residential market. 4. General Risk In addition to the risk factors specific to investment in property development projects, there are more general risks that can affect the value of the investment in the development, including: The state of Australia s and the world economies Movements in inflation and employment Changes in socio-economic factors Natural or man-made disasters. 5. Personal Risk Investment strategies will often depend on the income of the investor. Should there be a reduction or loss in the flow of income from the investor it may present a risk in the future ability to hold the investment. These risks may be managed through the appropriate use of income protection insurance, life insurance and trauma insurance. 6. Interest Rate Risk Movements in interest rates can have a number of effects on an individual property investment. Specifically, an increase in interest rates may have an immediate effect on the costs of holding an investment property. Additionally, sustained interest rate rises may have a lagging effect in the form of reduced sales activity and property growth. CONFIDENTIAL PAGE 27

28 7. Policy Risk Changes in government policy may affect both holding costs and the expected growth performance of specific property investments. This may result in additional expenditure in order to finance your portfolio and the expected returns. 8. Oversupply An oversupply in property will have effects on both achievable rents and growth performance. Due to the length of time typically required to construct medium and high density developments, the short term supply curve is inelastic. This means that property supply has an inherent inability to adjust quickly enough to meet demand. A sudden reduction in demand or an unexpected increase in supply may result in oversupply. Typically this risk is most acute towards the end of the property cycle. We do not foresee any short term risk of oversupply in the current market. 9. Settlement Risk Settlement risks may prevent the purchaser s ability to settle on the property. Typically, these are related to difficulties in obtaining finance through valuation shortfalls at the time of settlement or changes in the purchaser s personal circumstances that result in the refusal of the purchaser s credit application. This may result in the loss of the deposit or any monies owed to the developer. This risk may be managed by obtaining pre-approval of finance (for completed property) prior to exchange of contracts. CONFIDENTIAL PAGE 28

29 Appendix VIII Glossary of Terms Common terms used by property Investors and Financial Institutions Application Fee Bridging Finance Body Corporate A fee paid by the borrower to the lending institution for obtaining finance. A short term loan/facility that is often used when buying a new dwelling previous to settling an existing dwelling. The term Body Corporate refers to a home owners association charged with the administration of one or more housing units. Owners of the individual dwellings pay a fee to provide for maintenance of common areas and provide cover for repairs that may arise in the future. Capital Growth The change in value of an investment. This is calculated by subtracting the purchase price from the current value of the investment and is usually expressed as a percentage. If the price of the capital asset has declined instead, this is called a capital loss. Comparison Rate Deposit Guarantee Equity Gross Infrastructure Interest in Advance Interest Only Loan Price $/m2 A rate used to compare the borrowing costs from competing lenders. The basis of comparison includes the interest rate and the majority of fees and charges payable during the life of the loan. The figure is expressed in percentage terms. It should be noted that some costs including redraw fees or early repayment fees, and cost savings such as fee waivers, are not included. A substitute for a cash deposit used to purchase a property. At the time of settlement, the buyer is required to pay the full purchase price. The net value of the asset. This is calculated as the value of the property less any outstanding loans secured by the property. The complete amount before deductions for taxation, inflation, or any other various fees that may be incurred. The term gross return refers to the amount of capital growth and yield before taxation, body corporate, fees, inflation and other expenses are taken into account. Basic facilities required for a community or society to function as an economy, including transportation, communication, provision of water and power and the public institutions needed for security, welfare, health and education. When interest is charged at the beginning of a period of time. For example, charging the first years interest in the first month of a loan. It is generally only available on fixed rate loans for investment purposes. A loan facility commonly used for investment loans where the borrower only pays the interest component of the loan for a specific period of time. A measure for determining the relative value of a given property based on the internal size. This is calculated by dividing the purchase price by the internal area (measured in m2) and expressed as dollars per m2. CONFIDENTIAL PAGE 29

30 Real Return Rental Guarantee Valuation Yield The return on investment, less the reduction in its value as a result of inflation. Real rates are important as they tell you what the actual increase in value is, and how much of a return was less the effect of inflation. A guarantee by developers to pay an agreed level of rent should a shortfall achievable in the market arise. This is usually based on a percentage of the purchase price. The estimated worth of a project based on comparable sales with projects of a similar type. This is conducted by a registered valuer. An annualised rate of return for a given investment. This is calculated as the annual achievable rent expressed as a percentage of the purchase price (or current market value) of paid investment. CONFIDENTIAL PAGE 30